Whilst China nurses its wounds, it not only has to change tack in Hong Kong but also come to terms with the fact that ‘reunification’ is often wishful thinking

Hong Kong’s integration with China led to the CEPA in 2003 and 9+2 Agreement in 2004. But the downside has been manufacturing jobs moving to China andHong Kong finding itself competing with Chinese provinces. Now, pro-China groups and even pro-China newspapers have a major presence in Hong Kong.

The tropical isle of Hong Kong, home to 7.2 million people, breathes ‘yellow’: the colour being synonymous with the democratic upsurge that took Hong Kong and the world by storm in July 2014. ‘Yellow’ defined the protest, symbolic of a unified campaign for democracy. Hong Kong burst into a spectacular display of yellow ribbons, yellow umbrellas and the yellow song. Protesters raised the banner of Occupy Central (occupying crucial districts such as Tsim Sha Tsui and Admiralty), against a Beijing-backed election plan for the chief executive of Hong Kong in 2017. Beijing was granting the mainland version of universal suffrage, through a Bill to elect the next executive in 2017 where candidates would be pre-approved and pre-screened. Hong Kong is an executive-led government, but where the executive lacks the popular mandate. People of Hong Kong questioned the legitimacy of Beijing-backed plan. For them, making the chief executive and Legislative Council (LegCo, the unicameral legislature) a truly representative body with universal suffrage—as the world understands it—has been at the heart of protracted discontent.

Protests began gathering momentum again a few weeks ago, as the Bill came up for approval at the 70-member LegCo. Protesters expressed their anger over Beijing’s screening of candidates, antithetical to the democratic premise that Beijing had promised to Hong Kong. Beijing stood ground, firing warning salvos to allow the passage of the Bill.

The Bill required a two-third majority. But on June 18, as many as 28 members of LegCo opposed it, five were in support, while the rest walked out. LegCo has 35 members directly elected from geographical constituencies (called pan-democrats), while the other 35 are indirectly elected from functional constituencies. The pan-democrats and many Hong Kongers want real universal suffrage—attested by mass annual rallies from 2003 to 2007.

What Beijing offered was nothing short of a farce—that Hong Kongers better vote between the candidates it selected.

With the Bill shot down, the election for the chief executive will revert to the existing “simple majority by 1,200-member election committee”. With chief executive CY Leung’s term expiring in 2017, the question of universal suffrage hangs in the air.

Hong Kong was meant to flaunt China’s successful experiment of “one country, two systems”, whereby the Hong Kong Special Administrative Region could retain its social, economic and legal systems for 50 years, but not foreign and defence affairs (in 2047, Hong Kong will revert to Chinese governance). Hong Kong would continue with English as its official language, the Hong Kong dollar as currency, a free press, independent judiciary, freedom of association, private property and ownership of enterprises. Article 159 of the Basic Law (the mini-constitution) promised that the “ultimate aim is the selection of the chief by universal suffrage upon nomination by a broadly representative nominating committee in accordance with democratic procedures”. China had painstakingly tried to use this to demonstrate a possible formula to a recalcitrant Taiwan for ‘reunification’.

Since Hong Kong’s handover by Britain to China in July 1997, the island has morphed into an even more curious anomaly: an English-speaking, bustling free economy with an openly vibrant civil society, but with restrictive, top-down governance coming from Beijing. Hong Kong with its “colonial frame, mainland fixtures, Hong Kong style” was deemed to be autonomous, where China stated that “a high degree of autonomy does not mean independence” plus Beijing had promised to stick by the adage “the river water will not flow into the well water”, indicating a hands-off approach vis-a-vis Hong Kong, but with time has repeatedly reneged on this.

Economically and politically, Hong Kong’s integration with China led to the Closer Economic Partnership Arrangement (CEPA) in 2003 as well as the 9+2 Agreement (nine nearby Chinese provinces plus Hong Kong and Macau) in 2004. But the downside has been manufacturing jobs moving to China and Hong Kong finding itself competing with Chinese provinces; politically, various pro-China groups (the Democratic Alliance for the Betterment of Hong Kong), pro-China commissions (the Land Commission) and even media such as pro-China newspapers Da Gong Bao and Wen Wui Bao have a major presence in Hong Kong.

But despite this ‘infiltration’, other factors are also at play. Many of Hong Kong’s protesters were born in the 1990s when Hong Kong just about reverted to China’s fold. As Asia’s Manhattan, Hong Kong did not want to be ‘another Chinese city’ and its people don’t want to be ‘Chinese’ but ‘Hong Kongers’. Two major protest blocks in Hong Kong are led by very young, video-gaming students—Scholarism is led by 18-year-old Joshua Wong, and the Hong Kong Federation of Students is led by 21-year-old Nathan Law.

Hong Kong is also restive because of its own pressures—low fertility, unemployment, poverty and rising inequality. It has one of the lowest fertility rates in the world—1.17 births per woman, much below the replacement rate of 2.1%. Economists say that the island’s average annual native population growth rate between 2007 and 2036 will be 0.7%, but the absolute size rising from 6.86 million to 8.57 million—because of immigration from the mainland.

Immigration also explains why the educational level in Hong Kong is low. Unemployment rate, partly owing to the island’s transition from a ‘manufacturing hub’ to a ‘knowledge economy’, was 2.2% in 1997, rising to to 8.7% in 2003 and 9.3% now. In 2005, 1.2 million (of total 6.9 million) were classified as poor. In 2001, the Gini coefficient was 0.525, rising to 0.537 in 2011, catching up with an unequal China whose Gini coefficient is 0.55. For Hong Kong, which has 45 billionaires on the Forbes 2014 list, the chasm is wide and growing.

Some of the resentment has been directed at the mainland, the increasing ‘mainlandisation’. Since the easing of travel restrictions, mainlanders visiting Hong Kong have swelled from 4.5 million in 2001 to 40.7 million in 2013.

Cases of rich mainlanders parking their money in Hong Kong’s assets (housing) has inflated prices. Parallel trading, or ‘suitcase traders’, from the mainland is common. These suitcase traders throng the island to buy toiletries, branded goods and baby-formula (following a series of melamine tainted baby-formula scandals in China in 2008), driving up prices in the city and leading to shortage. For example, Hong Kong customs department reported 5,000 cases of illegal export of baby-formula last year.

It is quite surprising that China did not see the protests coming. Taiwan’s Taipei Times hinted that one-China policy could be ‘unsustainable’. Unfazed, or to drive home a point, by developments in Hong Kong, China has removed the entry-permit requirement for Taiwan residents to China to facilitate ‘cross-Strait’ exchanges. The Taiwan compatriot travel document is to be changed to an IC card (Hong Kong and Macau were given an IC card in 1999). Taipei Times said this was an “attempt to downgrade Taiwan’s sovereign status, all the while ensuring Taiwan is Hong Kong-ized, creating an international impression that Taiwan is part of China.”

Whilst China nurses its wounds, it not only has to change tack in Hong Kong but also come to terms with the fact that ‘reunification’ is often wishful thinking. If Hong Kong was to show Taiwan that it too could become part of China with its own system, clearly the events of the last one year show that China has its own goalposts, which shift as they want it. For all its bravado, with the punch on its face, China needs to and will be introspecting.

The author is a Singapore-based Sinologist and currently adjunct fellow, Institute of Chinese Studies, New Delhi